Overdrafts are an expensive form of debt and there are several good reasons to avoid them. Here are some practical steps to help you escape the cycle.
You could:
- Gradually reduce your overdraft
- Use a credit card or savings to pay it off
- Separate your overdraft from your day-to-day banking
Are you using overdraft to boost your income? There are other ways to do this.
An overdraft is good if you need funds in an emergency. But it is an expensive way to borrow.
It is best to:
- Look for cheaper sources of income
- Use your overdraft as a last resort
How can I stop living in my overdraft?
It is easy to forget that overdrafts are a form of debt. Especially if you live in it.
This can be:
- A problem that built up over time or
- Because of a large one-off payment
Getting out can seem impossible but we are here to help.
Getting out of my overdraft – where do I start?
It can take a while to get out of your overdraft. It depends on:
- How much you use it, and
- How much you borrowed
Start with these steps:
- Stop using your overdraft if you can
- Stop using it if you do not need it to survive
- Start paying it off a soon as you can
- Create (or review) your budget
- Work out what your income and spending is
- Be detailed
- This is vital when in the next steps
- Speak to the people you owe
- They could agree to reduce your overdraft limit over time
- They may be willing to stop interest and charges for a while
Are you going into your overdraft every month? It may be a sign that you need free, expert debt advice.